The present invention relates generally to methods and systems of extending credit and more specifically to extending credit to a customer during an electronic transaction.
The growth of the Internet has created a corollary explosion in electronic transactions occurring over the Internet for the procurement of goods and services. Since the inception of the Internet, a preferred method of payment has been a credit card in one of its various incarnations. Accordingly, Internet transaction processing has been limited by a user's ability to obtain one or more of these transaction vehicles.
Furthermore, credit card associations have applied increasing pressure to merchants accepting their vehicle to maintain chargeback and return percentages under thresholds set forth by the associations. In the fluid and anonymous Internet environment, meeting these requirements becomes difficult, necessitating that a merchant apply exceedingly stern “transaction scrubbing” guidelines which cause many transactions which might otherwise have been accepted in a “brick and mortar” establishment to fail in the electronic environment.
Payment methods other than credit card transactions are available to Internet merchants including Automated Clearing House (ACH) payment methods and “e-cash”. However, both of these transactions have not been well accepted by customers who still prefer credit cards. Currently and in the foreseeable future, credit card transactions will dominate the world of Internet commerce.
Additionally, previous Internet payment vehicles have assumed that the customer already has a credit account established that may be used to tender payment during an electronic transaction. However, some customers may not want to use their pre-existing accounts or may simply never have adopted credit accounts for use in their previous transactions.
Recognizing this, a need exists for a method and system through which declined transactions, or transactions halted because a customer was unwilling or unable to tender payment in the form of an acceptable transaction vehicle, can be obtained and converted into credit through which income may be generated. Various aspects of the present invention meet such a need.